Nov 30, 2017 · by Lauren Rennie

How Retailers Prepare Inventory for the $6.59 Billion Season of Giving, and Returning

The holiday is in full swing, shaping up to be the largest season for retail yet. Online transactions on Cyber Monday this week reached a record $6.59 Billion according to Adobe Insights (a 16%+ increase from last year). The explosive popularity of free shipping (and returns) following the Amazon effect is now commonplace for many retailers. The financial impact of returns is at the forefront for many retailers large and small.

 

 

But when you consider that apparel retailers typically see return rates of 20-40%, it’s clear that this is a huge financial issue. Sales, gross margin and cash flow are all strongly affected.  If you looked at overall returns as one of your “suppliers,” you’d likely conclude that returns comprise the largest single supplier to your business!  It follows that returns are deserving of considerable attention.

Omni-channel retailing – where purchases originate in any channel and are fulfilled from multiple locations – adds importance and complexity for all retailers.  The omni-channel systems and processes our customers use reflect the best planning strategies of brick-and-mortar retailers and direct to consumer retailers.  As brick-and-mortar retailers address the growing challenge of omni-channel returns, they’d be wise to follow the path laid down by those already involved in direct retailing. Here’s why.

It’s in this area where direct retailers, as we’ve seen with many of our direct customers, have a leg up on their store counterparts.  Operationally, it’s always been critical for these multi-channel retailers to have rapid returns handling processes in place. That way, they can receive, process and re-inventory first-quality returns, and quickly make them available for selling in the relevant channel.

Likewise, the merchandisers and inventory planners of direct retailers are also miles ahead on this.  Because they have access to customer transactional data across several channels, they’re able to determine when and why returns occurred, and can then incorporate that data into their merchandise profit analytics and forecasts.  The same holds true for inventory planners who can incorporate inventory trends into their future inventory projections.  Our customer experience consultants with 20+ years of experience in the retail business often review best practices and strategies with our customers to help plan and forecast for this critical time of year where the season of giving, and returning, can make or break results.

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